a journey in retrospect
by Antone P. Braga
In 1960 I hired on as an insurance adjuster trainee with a large insurance company in Los Angeles. I knew nothing about insurance, just like the rest of us. The millions of people each year who suffer disasters such as earthquake, hurricane, fire and flood usually carry insurance, though generally have only an idea based on company advertising of what they should expect, even after asking around. Just how can their expectations hope to be met, and how can they conceive their damage claims or partake in the process? Nearly everyone has been left out of the loop.
Even by 1960 standards my salary hardly existed, that was the catch to being unqualified. But I soon learned my job well enough to start shopping for a better salary and territory. Working for one insurance company became about the same as the next. I found the work fairly simple, though I did not immediately realize why.
In the late ’60s I took a part-time job as well so that I could afford something or other that I’ve long since forgotten. I mention this because the sales manager said something to me one day that jarred me. He said, “Everything has a counterbalance, even insurance adjusting.” I argued that, as far as I could see, no such counterbalance existed for me. So long as I could settle policyholder claims and at the same time convince my company that I had protected its interest I qualified as a good adjuster.
I was naive of course. Have you ever tried to conscientiously represent two opposing persons in one transaction involving potentially large differences of opinion? It’s virtually impossible. You can’t split your integrity into two separate parts. Do you think you might end up siding with the one who hands you your pay check, trains you, controls your vacations, and gives you raises? Only if you’re human!
Sometime in 1971 I began to feel plagued by my realization that claim-adjusting is one-sided in favor of the company. Yet in theory, the policy language granted plenty of authority to the policyholder. I wondered why no policyholder ever seemed to exercise that authority, and why I’d never met anyone who knew anything about insurance adjusting from the policyholder’s point of view. I resolved to fill that niche.
The greatest need seemed to be in property claims. You know: your home, boat, automobile, business, etc. How can an entire population lack even a clue about possessions that are so dear to them? The answer didn’t come to me right away, but it’s simple really: the insurance companies can’t be expected to provide their own counterbalance to their policyholders, and there is not yet enough public pressure to make a change. What we end up hearing over and over, year after year is, “You’re in good hands,” or something similar.
In 1973 I heard of a small number of adjusters who represent policyholders instead of insurance companies. That idea intrigued me, especially with the sanction of a state license, so I took the exam and became licensed. By the way, adjusters who are licensed at all are licensed to represent either the company or the policyholder—one or the other, but not both. However, many company adjusters conduct business on the notion they represent policyholders and commonly act to prepare, file and adjust claims for policyholders. Most adjusters who work for insurance companies have never taken an exam and do not have an adjuster’s license. They operate under the license of the insurance company itself and are educated the way the company sees fit. I recently heard an ad boasting that the company agents were state licensed. Agents are licensed to sell insurance. Adjusters, when licensed, are licensed to adjust claims. But, I digress. The biggest change in my work concerned my compensation. Previously, I had always been paid by insurance companies. Well, not really. They paid me not from their own coffers, but from policyholder premiums, the same as they do for their advertising and other expenses. Things are not always as they appear—that’s how it is with assumptions.
Now I had to earn my living persuading policyholders to hire me. I ask you, which adjuster is more legitimate: one representing the insurance company, yet paid from policyholder premiums, or one representing the policyholder and paid from the policyholder settlement? If you think about it objectively, the insurance company adjuster should be paid from the company’s own pocket. Just imagine paying for an attorney who represents the other side, then that attorney claims to represent you as well in the same transaction, then you pay for your attorney on top of that. That’s how it is in the world of insurance–two party contracts between the public and the companies. They are indeed the other side, not the same side. I know they don’t want to be thought of as the other side, but they truly are and I believe have more to lose by trying to wear both hats at once. Nowhere else in our society do we tolerate anyone representing both sides in any one transaction or contract. We just haven’t gotten around to sorting it out yet when it comes to insurance. Actually it was first sorted out when insurance was invented. However, it has been gradually warped from its original intent ever since, in spite of the words that still exist and spell it out otherwise. These very words, in legal terms, have stood the test of time.
It is a blatant conflict of interest for the payer to represent the payee in a payment transaction, notwithstanding how usual insurance claim business is conducted between companies and policyholders. However, awareness is in the process to change that conflict of interest back to how intended and written in the insurance policy. It is a simple fix to revert to the language in the insurance policy itself, long ignored and all but removed from modern usage in favor of co-mingled interests when companies deal directly with their policyholders. I do believe though that eventually our assumed, commingled interests will be separated as they were originally intended, surely as any conflict of interest is worthy of separation.
In any case, I heard of a huge fire in Santa Barbara that had destroyed hundreds of homes. I joined forces with two other policyholder adjusters and agreed among ourselves to share expenses and earnings. We scrambled to get business, yet we attracted few policyholders to become our clients. Those who did hook up with us were subjected to all sorts of pressure to cancel our contracts. The Santa Barbara newspaper ran a front-page-expose, in a manner of speaking, on policyholder adjusters. The paper said we were charging a fee for a service that was not legitimate (notwithstanding we acted under our State issued licenses). Public officials welcomed company adjusters with open arms and let them past security lines to reach policyholders, while we were refused access. The three of us marched into the newspaper and demanded to have our side of the story told. The paper ultimately printed the story, but well back in the paper and long after the damage had been inflicted.
As I walked along a country road about that time, a thought flashed through my mind: If policyholders are dissuaded from hiring adjusters to handle their claims, why not enable them to deal with company adjusters themselves? Why not offer policyholders the fundamental information they need, like rules that govern companies’ behavior, claim values, their rights and responsibilities, and adjusters’ jargon. If I, as the policyholder representative bore the stigma of illegitimacy, surely policyholders themselves are legitimate and entitled to have a basic understanding of how to determine what they are entitled to under their property insurance policies (home, business, auto, boat, etc.), in terms of fundamental adjusting principles, rights, and rules that meet what they have come to expect. It not only helps to have access to rights and rules, where are we without them? There is no reasonable argument against the policyholder having equal information as the company. No one could very well argue that a policyholder in good standing is any less legitimate than the company itself. So I started writing a book for policyholders.
I soon found to my consternation that the people who need my information the most, disaster survivors, are the least likely to comprehend. And in retrospect I guess I can understand why. Insurance company advertising, financed by policyholders, fosters confidence in the insurance company. A personal disaster like a fire or flood is stressful enough without the added burden of learning at that moment that one’s confidence may be misplaced.
The assumption that a long accepted belief is valid—without any knowledge of the facts behind that belief—can lead to distortion on a grand scale. More so than ever the mere assumption you are in “good hands,” absent disaster insurance rights and recovery rules, may simply invite a walk down the primrose path.